What currency is used for settlement in Hainan Free Trade Port (How Hainan Free Trade Port Works)

What currency is used for settlement in Hainan Free Trade Port?

According to the “China Financial Reform and Development Report (2021)” released by the People’s Bank of China, the digital renminbi pilot in Hainan is a new international payment tool officially authorized and legally introduced by the country.

According to the official announcement of the central bank, the “Foreign Exchange Management Measures” stipulate that the two forms of foreign investment are in the form of legal currencies such as the renminbi, US dollars, representative cash in Australian dollars, and other virtual currencies.

Specifically, Hainan Free Trade Port uses the central bank’s base currency of “Belt and Road” countries or foreign currency exchange bills to conduct overseas transactions. Among them, “Belt and Road” member countries directly purchase services from foreign investors through cross-border remittances and transfers. Various non-face-to-face electronic wallets can also be used for fund transfers. (Securities Daily)

How does Hainan Free Trade Port work

Hainan Free Trade Port has certain inherent advantages in terms of policies. On the one hand, the establishment of the free trade zone system is one of the important foundations for Hainan’s opening to the outside world. On the other hand, as the world’s second largest economy, Hainan has enormous development potential. For the application of new technologies such as blockchain and artificial intelligence, it can provide more convenient technical and platform services.

Hainan Free Trade Port will put forward higher requirements for the implementation of national strategies, and also put forward more detailed requirements. From the regulatory agencies to the legislators, this means that Hainan has a relatively clear goal. With the comprehensive deepening of reform in Hainan and the advancement of digital China construction, these basic conditions may be further optimized.

So, how can projects like the “Belt and Road” be implemented in the future? How will Hainan proceed? Why is this said? First, what is a free trade zone? According to the “Opinions on Strengthening Information Sharing Mechanisms,” the “Opinions” clearly state the ability and necessity for Hainan to actively explore the use of data elements to promote the reform of the international rules system. This includes supporting the innovation of government affairs cloud computing applications based on big data, and building smart city infrastructure for modernization of social governance capabilities. In addition, it encourages the use of data analysis, blockchain, 5G, and other cutting-edge technologies for industrial research, development, transformation, and demonstration applications.

The development prospects and significance of Hainan. Hainan is positioned as a national sovereign blockchain operated on the basis of independent intellectual property rights in China, mainly playing a guiding role in core values. It is a comprehensive and decentralized public network architecture that achieves cross-border interconnection and secure and reliable information exchange through the blessing of cryptographic technology. Its operating mode is similar to the Internet but does not have special requirements for government departments, so it is considered a highly confidential network space design solution. At present, some companies have begun to try to solve existing problems using blockchain. For example, recently, Shenzhen launched a supply chain financial system based on the underlying system of blockchain. In addition, the Politburo meeting on September 10 last year emphasized accelerating the integrated application of new generation information technologies such as blockchain and promoting the widespread landing of blockchain in various industries. In January this year, the Political Bureau of the Communist Party of Japan made an important deployment on the current situation and development trend of blockchain technology. The “Opinions” pointed out the need to strengthen the collective learning of top-level planning leadership, improve relevant laws and regulations, and increase investment. Continuously do a good job in risk prevention and control, and focus on cracking down on virtual currency trading speculation activities.

Fourth, the experience of Hainan Pilot Free Trade Zone (Beijing) and Shanghai Free Trade Pilot Zone deserves attention. Earlier news, Hainan is in the stage of formulating the “Overall Idea” (draft for soliciting opinions), and is planning research work in the field of blockchain. On the afternoon of April 14, 2020, the “Hainan Free Trade Zone” (referred to as Haidian District) officially issued the “Management Regulations of Hainan Free Trade Port”. At the end of March, Yi Gang, the governor of the People’s Bank of China, presided over an executive meeting of the State Council, reviewing and approving in principle the establishment of Hainan Free Trade Port. Li Lihui, Deputy Director of the Hainan Provincial Department of Industry and Information Technology, said at the event, “We will seize the opportunity to build a national-level highland for the development of the digital economy.” In early May, Hainan initiated the application procedure for the pilot area of the Hainan Free Trade Port.